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November 29, 2007

What a Difference a Year Makes – Part 2

Kevin E. Dayhoff

In yesterday’s column I wrote that with the passage of this tax package by the General Assembly, there are now more than ever two Marylands: a rural Maryland that exists to provide quality of life and common sense for the other Maryland – the urbanized areas where reason and common sense have taken a holiday.

The other curiosity is that now that the governor has been successful in an historic rise in taxes, how in the world will he indemnify and justify this action in his future pursuit of public office and leadership. How will our quality of life be measurably increased in the three years that remain in his term?

Let’s attempt to address both issues.

One thing is for certain, contrary to promising premature predictions, including my own, 2010 is a long way off in “political years,” and Maryland Republicans are currently left wallowing around like doomed mastodons looking in from the sidelines while ingloriously trying to extricate themselves from a political tar pit.

Unless, Maryland Republicans are able to find a new platform other than the floor of the statehouse in Annapolis, and an alternative news delivery system to Baltimore’s Sun, which continues to frame and focus most political discussion and public policy making in Maryland, they are doomed.

First of all, many have criticized the governor for having a special session instead of attempting to deal with increasing revenues in the regular legislative get-together.

However, the governor was smart to do it this way. Many people had predicted that the first thing the O’Malley administration would do is raise taxes. This overlooks the Herculean effort of the 2006 election campaign and the fact that the new occupants of the second floor of the statehouse needed time to get their arms around Maryland’s budget. It is huge and awfully unyielding.

Next they needed time to lay out the imperative for a change to the state’s revenue structure. This was done carefully by beginning with the Maryland Municipal League’s summer convention – perhaps the friendliest audience for which the governor could wish.

Next, by beginning the Special Session right before Thanksgiving, there was a sense of urgency developed by the legislators to get it all over with before the holidays began.

Besides, the sessions, which lasted laboriously past midnight, were convenient in avoiding a certain amount of public scrutiny.

Those who suggest that the revenue measures could have been handled as emergency legislation in January overlook the fact that such measures require 60 percent majorities. Not one of the revenue bills passed in the special session by 60 percent.

Passing the taxes so early in the governor’s term of office increases the probability that after the holidays, and Maryland’s infamous winter season, most voters will forget all about it by spring. By 2010 it will all be a distant memory, if remembered at all.

By spring, we will have endured another session of the General Assembly and the fall 2008 presidential election will be in full swing, increasing the chances of widespread voter amnesia.

By then the other shoe will drop. It has always been said that the devil is in the details, and deep in the details of much of the tax increases are hidden surprises for rural county and municipal governments – as more money flows into Annapolis, their revenues are going to decline.

Examples abound above and beyond the anecdotal accounts that many rural shoppers are close to Pennsylvania and Delaware and can easily avoid the increase in sales tax by traveling 20 minutes or less across the border.

This means less of the sales tax revenue flowing into rural local government coffers.

But let’s look at something much more onerous, local government revenue from income taxes.

Under the taxing scheme, those with incomes over $150,000 will pay much more in income tax. People who make under $60,000 will pay the same rate as before, but get a higher personal exemption.

As reinforced by the political web site, “Wryoak” written by anonymous Annapolis insiders who would lose their jobs if they used their real names, the “tax a person owes to the county or municipality is tied to how much he owes to the state. In the new scheme, rural counties will see less revenue since they tend to have more people of modest means who will owe less in taxes.”

Meanwhile the more affluent counties will see an increase in their revenues.

As rural local governments faces raising taxes to make up the difference, one avenue of relief will be to appeal to the O’Malley administration, which will be awash in cash.

Bear in mind, most of the rural “red” counties have conservative Democrats and Republican delegations to Annapolis. Throughout the state there is always tension between local government and their respective delegations to Annapolis.

Capitalizing on this, you can look forward to seeing the O’Malley administration showing up at a road improvement, school, or much-needed social program ribbon cutting near you – with cash in hand, all the while noting that your Republican delegation to Annapolis is ineffective in delivering the goods and services you need and perhaps you may want to elect some good Democrats in the future.

Think about it. I hope that I am wrong, but fear that I am not.

Kevin Dayhoff writes from Westminster: E-mail him at:

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